Trends and Implications of Interest Rate Changes in Tanzania

Overview

Interest rates in Tanzania have shown notable changes over the period from April 2023 to April 2024. Both lending and deposit rates have exhibited varying trends, contributing to a narrowing interest rate spread, indicating a potential reduction in credit risk and borrowing costs.

Lending Rates

1. Overall Lending Rate:
   • The average lending rate decreased slightly from 15.91% in April 2023 to 15.42% in April 2024.
   • There was a general downtrend in the lending rate, despite some fluctuations, with a peak of 16.02% in June 2023.
2. Short-term Lending Rate (up to 1 year):
   • Started at 16.55% in April 2023 and decreased to 15.93% in April 2024.
   • The rate saw a peak of 17.10% in June 2023 before a steady decline.
3. Negotiated Lending Rate:
   • Negotiated rates showed minimal fluctuations, staying around 14%, with a slight increase to 13.95% in April 2024 from 13.65% in April 2023.

Deposit Rates

1. Savings Deposit Rate:
   • Increased from 1.60% in April 2023 to 2.79% in April 2024.
   • There was a noticeable jump from 1.69% in September 2023 to 2.60% in December 2023, followed by a gradual increase.
2. Overall Time Deposit Rate:
   • Rose from 6.79% in April 2023 to 7.44% in April 2024.
   • The rate peaked at 7.45% in December 2023.
3. 12-months Deposit Rate:
   • Increased from 7.70% in April 2023 to 8.21% in April 2024.
   • There was a significant rise to 8.98% in September 2023, which then decreased slightly.
4. Negotiated Deposit Rate:
   • Averaged around 9.33% in April 2024, starting from 9.46% in April 2023.
   • This rate saw some fluctuations but remained relatively stable, peaking at 9.59% in March 2024.

Interest Spread

• The spread between short-term interest rates (up to 1 year) decreased from 8.84 percentage points in April 2023 to 7.72 percentage points in April 2024.
• This narrowing spread indicates a reduction in the cost of borrowing and a decrease in credit risk within the market.

Monthly Interest Rate

The trend in the interest rates indicates a gradual easing of lending rates and an increase in deposit rates, which has led to a narrower spread between the two. This is a positive sign for the economy, suggesting improved market confidence and lower borrowing costs.

Economic Implications

1. Easing of Lending Rates:
   • The slight decrease in overall lending rates from 15.91% to 15.42% suggests that borrowing has become marginally cheaper over the year. This can stimulate economic activity as businesses and individuals find it more affordable to take out loans for investment and consumption.
2. Stable Negotiated Lending Rates:
   • The relatively stable negotiated lending rates around 14% indicate that banks' willingness to offer customized loan terms to certain borrowers has not changed significantly. This stability might reflect a consistent credit risk assessment and demand for loans among borrowers who negotiate terms.
3. Increase in Deposit Rates:
   • The rise in deposit rates, particularly the overall time deposit rate from 6.79% to 7.44% and the 12-month deposit rate from 7.70% to 8.21%, suggests that banks are competing more aggressively to attract deposits. Higher deposit rates can encourage savings, which can then be used by banks to fund more loans.
4. Narrowing Interest Spread:
   • The narrowing of the short-term interest spread from 8.84 percentage points to 7.72 percentage points indicates a reduction in the difference between what banks charge for loans and what they pay on deposits. This can signify several things:
     • Reduced Credit Risk: As the spread narrows, it may indicate that the perceived risk of lending has decreased, allowing banks to charge lower premiums on loans.
     • Competitive Market: Increased competition among banks could be driving both loan and deposit rates closer together, benefiting consumers with lower loan costs and higher returns on savings.
     • Economic Stability: A narrowing spread often reflects a more stable economic environment where the risk of defaults is lower.
5. Fluctuations in Rates:
   • The data show fluctuations in both lending and deposit rates over the months. These fluctuations can be influenced by various factors such as monetary policy changes, inflation expectations, and shifts in supply and demand for loans and deposits.

Interpretation for Different Stakeholders

1. For Borrowers:
   • The decrease in lending rates means lower borrowing costs, making it more attractive for businesses to invest in expansion and for consumers to finance large purchases.
2. For Savers:
   • Higher deposit rates, especially for time deposits, provide better returns on savings. This can incentivize saving over spending, potentially affecting consumer spending patterns.
3. For Banks:
   • The narrowing spread can squeeze profit margins, pushing banks to find efficiencies or new revenue sources. However, the stable and improving rates also suggest a healthier loan portfolio with lower default risks.
4. For Policymakers:
   • The overall trends might reflect the effectiveness of monetary policies aimed at stimulating economic growth while maintaining financial stability. Policymakers can use this data to adjust interest rates, reserve requirements, and other tools to maintain or improve economic conditions.
5. For Investors:
   • Understanding the trends in interest rates can help investors make informed decisions about where to allocate their resources, whether in banking stocks, bonds, or other financial instruments sensitive to interest rate changes.

Tanzania's GNI per Capita in the East African Context

Gross National Income (GNI) per Capita:
GNI per capita is a crucial economic indicator representing the average income of a country's residents. It is calculated by dividing the total national income by the population. For Tanzania, the GNI per capita is an important measure of economic performance and social well-being.

Current Status in Tanzania:
As per the World Bank's income classification, Tanzania falls under the low-income economies with a GNI per capita of $1,200. This indicates that there is significant room for economic growth and improvement in living standards.

Implications of High GNI per Capita:
Achieving a higher GNI per capita is essential for Tanzania's growth and prosperity for several reasons:

1. Reduced Poverty:
   A higher GNI per capita typically signifies that more income is being generated per person. This increased income can help reduce poverty levels, enabling individuals and families to afford better housing, nutrition, healthcare, and education. These factors are crucial for breaking the poverty cycle and improving overall quality of life.
2. Higher Living Standards:
   As residents earn more, their standard of living improves. This includes better access to essential services and amenities, leading to improved health and educational outcomes. Higher income levels also enable individuals to invest in better housing and consumer goods, further enhancing their quality of life.
3. Better Healthcare and Education:
   Increased income allows for more significant investment in healthcare and education. Improved healthcare services can reduce disease prevalence and increase life expectancy, while better educational opportunities can lead to a more skilled workforce, driving further economic growth.
4. Social Development:
   High GNI per capita supports broader social development objectives. It facilitates the implementation of social welfare programs, infrastructure development, and the delivery of basic services to all residents. This helps create a more inclusive society where everyone has the opportunity to prosper.
5. Sustainable Growth:
   Higher income levels contribute to sustainable economic growth. With more resources available, the government and private sector can invest in sustainable practices and technologies, promoting long-term economic stability and environmental sustainability.

Role of Coordinated Efforts:
To achieve and sustain a high GNI per capita, coordinated efforts from various stakeholders are essential:

• Government:
  The government plays a pivotal role in creating a conducive environment for economic growth. This includes implementing policies that promote investment, innovation, and fair trade. Additionally, public investments in infrastructure, education, and healthcare are critical.
• Corporate Sector:
  The private sector drives economic activity through job creation, innovation, and productivity improvements. Companies can contribute to higher GNI per capita by expanding their operations, investing in new technologies, and providing fair wages.
• Foreign Partners:
  International cooperation and foreign investment are vital for Tanzania's economic growth. Foreign partners can provide financial resources, technical expertise, and market access, helping to accelerate development.

Tanzania can work towards achieving a higher GNI per capita, ultimately fostering a more prosperous and equitable society.

According to the World Development Report 2024, Tanzania's GNI per capita is $1,200, placing it in the lower-middle-income category. Comparing Tanzania to its East African neighbors, we see the following:

• Kenya: GNI per capita is $2,170
• Uganda: GNI per capita is $930
• Rwanda: GNI per capita is $930
• Ethiopia: GNI per capita is $1,020

This data reveals that Tanzania's GNI per capita is higher than Uganda and Rwanda but lower than Kenya.

1. Kenya has the highest GNI per capita among these East African countries, indicating better average income levels and potentially higher living standards.
2. Tanzania follows Kenya but has a GNI per capita lower than half of Kenya's, reflecting significant room for economic improvement.
3. Uganda and Rwanda have similar GNI per capita values, both lower than Tanzania, indicating more significant economic challenges in these countries compared to Tanzania.

Implications for Tanzania Economy

1. Economic Growth: Efforts to increase GNI per capita can lead to reduced poverty, improved living standards, better healthcare and education, and overall social development.
2. Government and Policy: Coordinated efforts from the Tanzanian government, corporate sector, and international partners are crucial for economic growth and sustaining high GNI per capita.
3. Development Focus: Investment in infrastructure, social welfare programs, and basic services will be essential in leveraging Tanzania's position relative to its neighbors to foster more inclusive and sustainable growth.

Hence, Tanzania, while better positioned than Uganda and Rwanda, has significant potential for growth to match or surpass Kenya's economic metrics, requiring focused development strategies and coordinated efforts.

References:

• World Bank, World Development Report 2024: “Economic Growth in Middle-Income Countries will explore the challenges of economic growth in middle-income countries”.
• World Bank's income classification and GNI per capita data for Tanzania.

Dar es Salaam's Startup Ecosystem: Driving Tanzania’s Innovation and Economic Growth

In the 2024 Global Startup Ecosystem Index, Dar es Salaam, Tanzania is highlighted as a notable ecosystem, especially in the context of African and East African cities for startups. Dar es Salaam is ranked 490th globally with a score of 0.507. In the previous year, Dar es Salaam, Tanzania, was ranked 536th globally in the Startup Ecosystem Index​. This positioning reflects positive momentum within Tanzania's startup ecosystem, indicating growth and potential in this region.

Positions of Dar es Salaam and other East African cities in the Startup Ecosystem Index for the years 2023 and 2024:

• Dar es Salaam, Tanzania: Improved by 46 positions, indicating significant progress and positive momentum in the startup ecosystem.
• Nairobi, Kenya: Improved by 15 positions, maintaining its strong position as a leading startup hub in East Africa.
• Kampala, Uganda: Improved by 10 positions, showing steady growth in its startup ecosystem.
• Addis Ababa, Ethiopia: Improved by 30 positions, reflecting considerable advancement and increasing recognition in the global startup landscape.

Dar es Salaam's improvement is notable compared to other East African cities, highlighting its growing importance and potential as a startup hub in the region.

The report also places Dar es Salaam among the top cities from unranked countries that have shown significant improvement. Specifically, Dar es Salaam leads along with other cities like Luanda and Tashkent, which are within the top 600 globally. This ranking underscores the city's increasing relevance and attractiveness for startup activities within Africa and East Africa.

In terms of the broader regional context, Dar es Salaam's ranking shows it is on an upward trajectory, potentially becoming a more significant hub for innovation and entrepreneurship in the coming years.

The Global Startup Ecosystem Index 2024 provides insights into Tanzania's entrepreneurship and economic development, particularly focusing on Dar es Salaam:

1. Global and Regional Ranking: Dar es Salaam is ranked 490th globally and is one of the top cities from unranked countries showing significant momentum. This reflects the city’s growing prominence in the global startup landscape.
2. Economic Development: The report highlights Tanzania’s positive trajectory in entrepreneurship, driven by various initiatives and an improving business environment. This progress is indicative of broader economic development efforts within the country. The momentum in Dar es Salaam is a sign of increasing economic activities and a favorable climate for innovation and startups.
3. Support for Startups: The city benefits from a range of supportive measures aimed at fostering entrepreneurship. These include public and private sector initiatives, international partnerships, and efforts to create a conducive environment for startups. This supportive ecosystem is crucial for sustained economic growth and the development of a robust entrepreneurial culture.
4. Entrepreneurial Ecosystem: Dar es Salaam's rise in the rankings demonstrates the city's potential to become a significant startup hub in East Africa. The city’s ecosystem is characterized by a mix of local talent, emerging tech industries, and increasing access to funding and resources for startups.

Hence, Dar es Salaam's positioning in the Global Startup Ecosystem Index underscores Tanzania's commitment to fostering entrepreneurship and economic development, positioning the city as a key player in the regional and global startup ecosystem.

Source: Global Startup Ecosystem Index 2024

Tanzania's Role in Africa's Diamond Production

Tanzania ranks ninth among the top ten diamond-producing countries in Africa, making a notable contribution to the continent's overall diamond output. Here is a detailed breakdown of Tanzania's position and significance within this list:

Rich Mineral Resources

• Diverse Mineral Wealth: Tanzania is part of Africa’s mineral-rich tapestry, benefiting from the continent’s extensive mineral reserves. The country is not only rich in diamonds but also in gold, copper, and other valuable minerals, making it a crucial player in the mining industry.

Diamond Production Statistics

• Production Volume and Value: According to the latest statistics from the Kimberley Process, Tanzania produced 375,533.14 carats of diamonds, generating a value of approximately $110,936,767.64. This substantial production highlights the country’s significant role in the global diamond market.
• Global Ranking: Despite being ninth in Africa, Tanzania’s diamond production places it within the top 22 diamond-producing countries globally. This reflects its importance and potential in the diamond industry on a worldwide scale.

Economic Impact

• Economic Contribution: The diamond mining sector is a vital part of Tanzania’s economy. The revenue generated from diamond exports significantly contributes to the country’s GDP, providing essential funds for development projects and economic growth.
• Employment and Development: Diamond mining creates employment opportunities and fosters local development. Many Tanzanians are employed directly and indirectly in the mining industry, which boosts the livelihoods of numerous communities.

Kimberley Process Certification

• Regulation and Ethical Practices: Tanzania's diamond production is regulated under the Kimberley Process Certification Scheme (KPCS). This international initiative aims to prevent the trade of conflict diamonds, ensuring that the diamonds exported from Tanzania are ethically sourced and contribute to peace and development.

Comparative Analysis with Other African Producers

Botswana: The Leading Producer

• Top Rank: Botswana is the top diamond producer in Africa, with a staggering production volume of 24,509,939 carats, valued at approximately $4.7 billion. The country’s efficient mining industry and substantial reserves position it as a global leader in diamond production.

Democratic Republic of Congo (DRC)

• Second Place: The DRC follows with 9,908,997.66 carats produced. Despite the high volume, the value is significantly lower at $64.96 million due to the type and quality of diamonds extracted.

South Africa and Angola

• Significant Producers: South Africa and Angola are also major players, with production volumes of 9,660,233 and 8,763,309.3 carats respectively. Both countries have well-established mining sectors contributing substantially to their economies.

Other Notable Producers

• Zimbabwe and Namibia: These countries produce 4,461,450.15 and 2,054,227.06 carats respectively. Their diamond industries are critical to their national economies.
• Lesser Known Producers: Lesotho, Sierra Leone, and Guinea, while producing smaller volumes, still play important roles in the regional diamond market.

Tanzania's Unique Position

Tanzania’s diamond industry, although smaller in scale compared to Botswana and the DRC, is vital for its economy. The diamonds extracted in Tanzania are known for their quality, adding significant value to the country's mining sector. The government's commitment to ethical mining practices and international cooperation through the Kimberley Process ensures that Tanzania remains a reputable player in the global diamond market.

This blend of substantial mineral wealth, economic contribution, and adherence to ethical standards underscores Tanzania's prominent yet unique position among Africa's top diamond producers.

Top 10 diamond-producing countries in Africa, including Tanzania:

SOURCE: Kimberley Process Certification Scheme

Understanding Tax Evasion Behavior in Tanzania: Insights from Regression Analysis

Introduction:

Tax evasion poses a significant challenge to governments worldwide, undermining revenue collection efforts and hindering socioeconomic development. In Tanzania, like in many other countries, tax evasion persists despite governmental efforts to enhance compliance. Understanding the determinants of tax evasion behavior is crucial for devising effective strategies to mitigate its prevalence and ensure a fair and equitable tax system.

This study aims to investigate the factors influencing tax evasion among Tanzanian taxpayers, with a focus on income level, perceptions of the tax system's fairness, beliefs in the effective use of tax revenue, and reasons for not paying taxes. By employing a regression analysis approach, this research seeks to unravel the complex interplay of these variables in shaping tax evasion behavior.

Results:

The regression analysis yielded insightful findings regarding the determinants of tax evasion behavior in Tanzania. Firstly, individuals with higher incomes per month exhibited slightly higher odds of engaging in tax evasion, indicating a nuanced relationship between income level and tax compliance.

Perceived fairness of the tax system emerged as a robust predictor of tax evasion behavior, with individuals who perceived the tax system as fair being significantly less likely to engage in tax evasion. This underscores the importance of fairness perceptions in fostering tax compliance among citizens.

Hence, belief in the effective use of tax revenue by the government was found to be negatively associated with tax evasion, highlighting the pivotal role of trust in government institutions and the perceived efficacy of public spending in shaping tax compliance behavior.

While reasons for not paying taxes showed a marginal effect on tax evasion, factors such as high tax rates, lack of knowledge on tax payment procedures, and distrust in the government were identified as potential drivers of non-compliance. These findings underscore the need for targeted interventions to address the underlying reasons for tax evasion and enhance taxpayer education and awareness.

Overall, the results shed light on the multifaceted nature of tax evasion behavior in Tanzania and provide valuable insights for policymakers seeking to strengthen tax compliance mechanisms and foster a culture of tax integrity among citizens.

 Regression Analysis:

Tax Evasion = β0 + 0.0402991*IncomeLevel + (-0.2949056)*Fairness + (-0.0700492)*EffectiveUse + (-0.0428999)*HighTaxRates + ε

Model Fit:

• The model explains a significant portion of the variance in tax evasion behavior (R-squared = 0.5153). This indicates that the independent variables collectively contribute to understanding tax evasion.
• The F-statistic tests the overall significance of the model, yielding a high value (F(4, 227) = 60.32) with a very low p-value (Prob > F = 0.0000), suggesting that the model is statistically significant.

Coefficients:

• Income Level per Month: The coefficient (0.0402991) indicates that for every one-unit increase in income level per month, there is a 0.0402991 increase in the log odds of tax evasion. This coefficient is statistically significant (p = 0.033), suggesting that income level influences tax evasion behavior.
• Perceived Fairness of the Tax System: The coefficient (-0.2949056) suggests that for every one-unit increase in perceived fairness of the tax system, there is a decrease of 0.2949056 in the log odds of tax evasion. This variable has a highly significant negative effect on tax evasion (p = 0.000).
• Belief in Effective Use of Tax Revenue: With a coefficient of -0.0700492, for every one-unit increase in belief in the effective use of tax revenue, there is a decrease of 0.0700492 in the log odds of tax evasion. This variable is also statistically significant (p = 0.034).
• Reasons for Not Paying Taxes: The coefficient (-0.0428999) indicates that for every one-unit increase in reasons for not paying taxes, there is a decrease of 0.0428999 in the log odds of tax evasion. Although this variable shows a negative effect on tax evasion, it is marginally significant (p = 0.053).
• Intercept (_cons): The intercept (2.623102) represents the log odds of tax evasion when all independent variables are zero. It is statistically significant (p = 0.000).

Interpretation:

• Individuals with higher incomes per month tend to have slightly higher odds of tax evasion.
• Perceiving the tax system as fair and believing in the effective use of tax revenue are associated with lower odds of tax evasion.
• Although reasons for not paying taxes seem to have a negative effect on tax evasion, the effect is not as strong as perceived fairness or belief in effective use of tax revenue.

Hence, the results shows that TRA should focus on enhancing the perceived fairness of the tax system and increasing public confidence in the effective use of tax revenue to discourage tax evasion.

The results from the regression analysis provide insights into the factors influencing tax evasion behavior among individuals in the study population:

Income Level per Month:

The coefficient suggests that individuals with higher incomes per month tend to have slightly higher odds of engaging in tax evasion. This could imply that as income increases, individuals might perceive themselves as having more to lose from paying taxes, leading to a greater likelihood of evasion.

Perceived Fairness of the Tax System:

The highly significant negative coefficient indicates that individuals who perceive the tax system as fair are less likely to engage in tax evasion. This suggests that perceptions of fairness play a crucial role in tax compliance behavior. When individuals believe that the tax system is fair, they are more inclined to fulfill their tax obligations.

Belief in Effective Use of Tax Revenue:

Similarly, the significant negative coefficient suggests that individuals who believe in the effective use of tax revenue by the government are less likely to evade taxes. This highlights the importance of trust in government institutions and the perceived effectiveness of public spending in shaping tax compliance behavior.

Reasons for Not Paying Taxes:

The coefficient for reasons for not paying taxes suggests a negative but marginally significant effect on tax evasion. This implies that individuals who cite various reasons for not paying taxes, such as high tax rates, lack of knowledge on how to pay, or distrust in the government, are somewhat less likely to engage in tax evasion.

Intercept (_cons):

The intercept represents the baseline log odds of tax evasion when all independent variables are zero. The statistically significant intercept suggests that even in the absence of the factors examined in the model, there is a baseline level of tax evasion behavior among individuals.

Implications:

• Perceived fairness and belief in effective use of tax revenue are strong determinants of tax compliance behavior. Efforts to improve transparency, accountability, and communication regarding tax policies and government spending could enhance tax compliance.
• While income level has a modest impact on tax evasion, policymakers should consider targeted measures to address tax compliance among higher-income individuals.
• Understanding the reasons for not paying taxes, although marginally significant, can provide valuable insights for designing interventions to improve tax compliance.

Source: Field Research 2024

Elevating Dar es Salaam Port to a Top-Ranking Status in Africa

Tanzania Port Authority (TPA): The Tanzania Ports Authority (TPA) is the organization responsible for managing and operating the ports in Tanzania. It oversees the major seaports of Dar es Salaam, Tanga, and Mtwara, along with several smaller ports. TPA plays a critical role in the national economy by facilitating trade and commerce, which in turn supports the broader East African region.

Dar es Salaam Port:

• Location and Significance: The Dar es Salaam Port is Tanzania's principal port, strategically located on the eastern coast of Africa. It serves as a major gateway for international trade for both Tanzania and several landlocked countries in East and Central Africa, including Uganda, Rwanda, Burundi, Zambia, Malawi, and the eastern parts of the Democratic Republic of Congo.
• Economic Impact: The port handles a significant volume of cargo, including containerized goods, bulk commodities, and vehicles. Its operations are vital for the import and export activities of these countries, making it a linchpin in the region's supply chain.
• Infrastructure and Capacity: The port has undergone various modernization and expansion projects to increase its capacity and efficiency. These improvements include the construction of new berths, dredging to accommodate larger vessels, and the enhancement of cargo handling equipment and facilities.
• Challenges: Despite its importance, the Dar es Salaam Port faces challenges such as congestion, inefficiencies in cargo handling, and administrative bottlenecks. These issues impact the overall performance and have kept it from being ranked among the top 10 highest-ranking ports in Africa according to the Container Port Performance Index (CPPI).

Container Port Performance Index (CPPI)

The CPPI is an annual report produced by the World Bank in collaboration with S&P Global Market Intelligence, aiming to provide a comprehensive assessment of container port performance worldwide. The index is designed to benchmark ports and promote improvements in efficiency, infrastructure, and operations.

• Methodology: The CPPI measures the performance of ports based on the average port hours per port call. This metric reflects the total amount of time a vessel spends in a port, from arrival to departure. Ports must have at least 24 valid port calls within a calendar year to be included in the index.
• Data Collection: For the CPPI 2022, data was collected from 348 primary ports, recording 156,813 port calls. Ports reporting fewer than 24 calls were excluded from the primary index but included in supplementary data.
• Evaluation Metrics: The index evaluates ports based on several criteria, including cost, landside connectivity and services, ship-to-shore interchange, and terminal capacity utilization.

Top 10 Highest-Ranking Ports in Africa (CPPI 2022)

According to the CPPI 2022, the following ports are the highest-ranking in Africa:

1. Djibouti Port, Djibouti: 26th globally
2. Berbera, Somaliland: 144th globally
3. Conakry, Guinea: 189th globally
4. Dakar, Senegal: 196th globally
5. Matadi, Democratic Republic of Congo: 197th globally
6. Tema, Ghana: 205th globally
7. Mogadishu, Somalia: 221st globally
8. Beira, Mozambique: 223rd globally
9. Freetown, Sierra Leone: 226th globally
10. Toamasina, Madagascar: 227th globally

Despite the strategic importance and significant economic impact of the Dar es Salaam Port under the Tanzania Ports Authority, it has not made it to the top 10 highest-ranking ports in Africa based on the CPPI. The CPPI highlights the need for continued improvements in efficiency, infrastructure, and operational processes to enhance the port's performance and competitiveness on the global stage.

Tanzania Ports Authority can significantly improve the performance and competitiveness of the Dar es Salaam Port, aiming for a higher ranking in future assessments of global port performance:

Infrastructure Development

• Expansion and Modernization: Continue with the expansion projects to increase the port's capacity. This includes constructing new berths, expanding existing ones, and upgrading cargo handling equipment.
• Dredging: Regular dredging to maintain and deepen the port’s channels to accommodate larger vessels, reducing the waiting time for ships.
• Technology Integration: Invest in advanced technologies such as automated cargo handling systems, real-time tracking systems, and port management software to streamline operations and improve efficiency.

Efficiency and Operational Improvements

• Reduce Congestion: Implement measures to reduce port congestion, such as optimizing vessel scheduling, improving turnaround times, and expanding storage facilities.
• Efficient Customs Processes: Streamline customs procedures to reduce delays. This can be achieved through better integration of customs systems, enhanced training for staff, and adopting more transparent processes.
• 24/7 Operations: Ensure that port operations, including customs, work around the clock to avoid downtime and maximize throughput.

Enhancing Connectivity

• Improved Landside Connections: Enhance road and rail links to the port to ensure smooth and efficient transportation of goods to and from the port. This includes investing in infrastructure improvements and maintaining existing roads and railways.
• Intermodal Facilities: Develop intermodal facilities to facilitate the seamless transfer of cargo between different modes of transport, such as road, rail, and sea.

Stakeholder Collaboration

• Public-Private Partnerships: Engage in public-private partnerships to leverage private sector investment and expertise in port operations and management.
• Regional Cooperation: Foster stronger regional cooperation with neighboring countries to create a more integrated and efficient logistics network, which can increase the volume of transit cargo through the port.

Policy and Regulatory Reforms

• Regulatory Framework: Simplify and harmonize regulatory frameworks to reduce bureaucratic obstacles. Ensure that port regulations are in line with international best practices.
• Incentives: Offer incentives to shipping lines and logistics companies to use the Dar es Salaam Port, such as competitive pricing, rebates, and discounts for high-volume users.

Capacity Building

• Training and Development: Invest in training programs for port staff to improve their skills and knowledge. This includes technical training, customer service, and operational efficiency.
• Management Practices: Adopt best management practices to enhance the overall performance and governance of the port operations.

Environmental Sustainability

• Sustainable Practices: Implement environmentally sustainable practices to reduce the port’s carbon footprint, such as using green energy, reducing waste, and improving water management.
• Compliance: Ensure compliance with international environmental standards and regulations.

Customer Service Improvement

• Customer Feedback: Establish a system to gather feedback from port users and stakeholders regularly. Use this feedback to make continuous improvements.
• Service Quality: Focus on improving the quality of services offered at the port, including faster turnaround times, better cargo handling, and enhanced safety and security measures.

Marketing and Promotion

• Global Outreach: Actively market the port’s capabilities and improvements to attract more shipping lines and logistics companies. Participate in international trade fairs and forums to showcase the port.
• Branding: Develop a strong brand identity for the Dar es Salaam Port as a reliable and efficient gateway for East and Central Africa.

Factors Contributing to Tanzania's Economic Lag Despite High GDP from Manufacturing

Despite Tanzania leading Africa in GDP from manufacturing, its overall economy remains smaller compared to countries like Nigeria, South Africa, Egypt, and Kenya. This highlights a discrepancy where Tanzania excels in a specific sector but does not translate this success into a broader economic dominance.

Recent Trends in Manufacturing GDP

In the fourth quarter of 2023, Tanzania's GDP from manufacturing decreased to 3,209,649.95 TZS million from 3,258,719.89 TZS million in the third quarter of 2023. Despite this slight decline, the historical data shows significant growth over the years. Since 2005, the GDP from manufacturing in Tanzania has averaged 1,716,435.69 TZS million, with the highest recorded at 3,258,719.89 TZS million in the third quarter of 2023 and the lowest at 373,896.38 TZS million in the first quarter of 2005.

Future Projections

According to TICGL Economics macro models and analyst expectations, Tanzania's GDP from manufacturing is expected to be 3,042,570.00 TZS million by the end of the current quarter. In the long term, projections indicate that this figure will rise to approximately 3,668,406.00 TZS million in 2025 and 3,892,179.00 TZS million in 2026. These projections suggest a continued upward trend, indicating a robust growth trajectory for Tanzania's manufacturing sector.

Comparative GDP from Manufacturing

Comparing Tanzania's GDP from manufacturing with other African countries provides a clearer perspective on its economic standing:

• Nigeria: Recorded 1,824,139 NGN million in March 2024, showcasing significant industrial output but in a different currency, making direct comparisons complex without conversion.
• South Africa: Reported 527,645 ZAR million in December 2023, indicating a strong manufacturing base.
• Egypt: Registered 466,361 EGP million in December 2023, reflecting its established manufacturing sector.
• Kenya: Recorded 220,028 KES million in December 2023, showing steady growth in its manufacturing sector.
• Other countries like Malawi, Gambia, Morocco, Djibouti, and Mauritius report lower figures in their respective currencies, indicating smaller manufacturing sectors compared to Tanzania.

Economic Context and Implications

Tanzania's leading position in GDP from manufacturing within Africa underscores its potential as a manufacturing hub on the continent. However, the overall smaller economy compared to larger African nations indicates that there is room for broader economic development. The manufacturing sector's growth could serve as a catalyst for more diversified economic growth, potentially enhancing Tanzania's overall economic standing in the future.

While Tanzania boasts a high GDP from manufacturing, its overall economy still lags behind other African countries, despite its significant natural resource wealth, particularly in mining. Factors contributing to Tanzania's economic lag compared to other African nations:

1. Diversification of Economy: Tanzania's economy heavily relies on a few sectors, such as agriculture, mining, and manufacturing. While the GDP from manufacturing is notable, a lack of diversification exposes the economy to vulnerabilities. Countries like South Africa and Nigeria have more diversified economies, with strong financial, service, and industrial sectors, which provide resilience against economic shocks.
2. Infrastructure and Logistics: Inadequate infrastructure, including transportation, energy, and telecommunications, hampers Tanzania's economic growth. Efficient infrastructure is crucial for facilitating trade, attracting investments, and fostering economic development. Countries like South Africa and Egypt have relatively better infrastructure networks, which support their economic activities.
3. Investment Climate: Tanzania's investment climate may not be as conducive compared to other African countries. Issues such as bureaucracy, corruption, and inconsistent policies can deter both domestic and foreign investments. Nigeria and Kenya, for example, have been actively improving their business environments to attract more investments, thus stimulating economic growth.
4. Human Capital Development: Tanzania faces challenges in human capital development, including education, healthcare, and skills training. Investing in human capital is essential for fostering innovation, productivity, and overall economic development. Countries like Mauritius and Kenya have prioritized education and skills development, which contribute to their economic competitiveness.
5. Regional Integration and Trade: Tanzania's integration into regional and global markets may not be as robust compared to its counterparts. Enhanced regional integration and participation in trade agreements can boost economic growth by expanding market access and promoting cross-border investments. Countries like Kenya and South Africa benefit from stronger regional trade networks and integration initiatives.
6. Macroeconomic Stability: Maintaining macroeconomic stability is crucial for sustainable economic growth. Factors such as inflation, fiscal deficits, and currency stability influence investor confidence and economic performance. Tanzania needs to ensure sound macroeconomic policies and institutions to support long-term growth, similar to what countries like Egypt and Morocco have been striving to achieve.

Tanzania's Mining GDP Leads Africa, Yet Overall Economy Lags Behind Peers"

Despite Tanzania's impressive performance in the mining sector, with GDP from mining reaching an all-time high of 2,137,627.97 TZS million in Q4 2023, the country's overall economy lags behind peers like South Africa, Kenya, Nigeria, Egypt, and Guinea. Contributing factors include limited economic diversification, less developed infrastructure, varying degrees of good governance, could be less favorable investment climates, lower levels of education and human capital, and differences in natural resource management. For instance, South Africa and Nigeria have more diversified economies and advanced infrastructures, while Kenya and Egypt benefit from pro-business policies and significant economic reforms. Tanzania's economic growth depends on addressing these broader structural issues to leverage its mining success into wider economic development:

Tanzania's Mining GDP Overview

GDP Growth in Mining:

• Q4 2023: Tanzania's GDP from mining reached an all-time high of 2,137,627.97 TZS million.
• Q3 2023: The GDP from mining was 2,026,632.67 TZS million.
• This indicates a notable quarter-over-quarter increase.

Historical Context:

• The average GDP from mining between 2005 and 2023 is 943,824.06 TZS million.
• The lowest recorded GDP from mining was 197,832.14 TZS million in Q4 2008.

Future Projections:

• By the end of the current quarter, GDP from mining is expected to be 1,871,303.00 TZS million.
• Long-term projections estimate GDP from mining will be around 2,281,421.00 TZS million in 2025 and 2,420,588.00 TZS million in 2026.

Comparison with Other African Countries

The comparison data shows the latest GDP figures from mining for several African countries. The figures are presented in the respective currencies of each country:

Insights

• Tanzania stands out with a significantly higher GDP from mining compared to other countries listed, demonstrating its leading position in the sector within Africa.
• The figures from Nigeria and South Africa also indicate strong mining sectors, though the figures are in their local currencies which require conversion for direct comparison.
• Countries like Guinea, Malawi, Kenya, and Mozambique show more modest contributions from their mining sectors.
• Botswana and Angola have lower figures, highlighting smaller scale mining operations or less contribution to GDP from mining compared to the leading nations.

Source and Reliability

The data source is the National Bureau of Statistics (NBS) - Tanzania, which ensures reliability for Tanzania's figures. The projections and historical averages provide a comprehensive view of the trends and future expectations in Tanzania's mining sector.

Hence, Tanzania's mining sector is experiencing substantial growth, making it a leader in Africa for GDP contributions from mining activities. The country's strategic focus on mining is evident in its upward trend and future projections, indicating continued growth and potential for investment and development in this sector.

Despite Tanzania leading in GDP contributions from mining, its overall economy appears to lag behind countries like South Africa, Kenya, Nigeria, Egypt, and Guinea for reasons behinds

Tanzania's impressive mining GDP contribution is significant, but overall economic performance depends on a combination of factors including diversification, infrastructure, political stability, investment climate, education, natural resource management, and market size.

1. Economic Diversification

• South Africa: Highly diversified economy with strong sectors in finance, manufacturing, services, and mining.
• Nigeria: Largest economy in Africa, heavily reliant on oil, but also growing in agriculture, telecommunications, and services.
• Egypt: Diverse economy with strong sectors in tourism, agriculture, services, and manufacturing.
• Kenya: Strong in agriculture, tourism, services, and emerging technology sectors.
• Guinea: Rich in natural resources, particularly bauxite, with mining being a significant part of the economy, but also focusing on agriculture and services.

2. Infrastructure Development

• South Africa: Advanced infrastructure in transportation, energy, and telecommunications.
• Nigeria: Improving infrastructure with large investments in energy and transportation.
• Egypt: Significant infrastructure investments, particularly in the Suez Canal and energy sectors.
• Kenya: Rapidly developing infrastructure, especially in transportation (e.g., Standard Gauge Railway) and energy.
• Guinea: Investments in mining infrastructure and hydroelectric power projects.

3. Political Stability and Governance

• Political stability and effective governance significantly impact economic growth and investor confidence.
• South Africa and Kenya have relatively stable political environments compared to Tanzania.
• Nigeria has challenges but is improving in governance.
• Egypt has stabilized post-Arab Spring with significant economic reforms.
• Guinea has faced political instability but is working towards stability and better governance.

4. Investment and Economic Policies

• Countries with more favorable investment climates and policies attract more foreign direct investment (FDI).
• South Africa: Well-developed financial systems and regulatory environment attract investments.
• Nigeria: Efforts to improve business climate, though challenges remain.
• Egypt: Economic reforms and incentives attract significant FDI.
• Kenya: Pro-business policies and innovation hubs (e.g., Silicon Savannah).
• Guinea: Mining reforms and incentives for foreign investors.

5. Human Capital and Education

• The level of education and skill development affects productivity and economic growth.
• South Africa, Kenya, and Egypt have better educational systems and higher literacy rates, contributing to a more skilled workforce.
• Nigeria is making strides in education but still faces challenges.
• Guinea is improving but still has significant gaps in education and skills development.

6. Natural Resource Management

• Effective management and utilization of natural resources can drive economic growth.
• South Africa: Well-managed mineral resources and diversified natural resource base.
• Nigeria: Oil and gas resources are crucial but require better management.
• Egypt: Efficient use of the Suez Canal and other natural resources.
• Kenya: Efficient use of agricultural resources and growing oil industry.
• Guinea: Rich in minerals, especially bauxite, with improving management.

7. Economic Size and Population

• Larger economies and populations can drive higher GDP due to greater domestic markets and labor force.
• Nigeria: Largest population in Africa, creating a large domestic market.
• Egypt: Large population with significant economic activities.
• South Africa: Well-developed economy with a large population.
• Kenya: Growing population and market size.
• Guinea: Smaller population but rich in resources.

Food Inflation in Tanzania: Price Stability and Third Place in East Africa

In March 2024, Tanzania's food prices increased by 1.40% compared to the previous year, reflecting a stable trend as it had an average food inflation rate of 8.05% from 2010 to 2024, peaking at 27.84% in January 2012 and dipping to a low of 0.10% in March 2019. With future projections indicating a slight decrease to 1.20% by the end of this quarter and around 1.40% in 2025 and 1.30% in 2026, Tanzania remains one of the African countries with the lowest food inflation rates. Comparatively, it stands third in East Africa for low food costs, led by Rwanda and Uganda, amidst varying rates across the continent, including Rwanda (-6.6%), Somalia (-3.97%), and Chad (2%).

Tanzania Food Inflation Overview

1. Recent Increase: In March 2024, the cost of food in Tanzania increased by 1.40% compared to the same month in the previous year.
2. Historical Average: From 2010 to 2024, the average food inflation rate in Tanzania was 8.05%.
3. Extremes:

• Highest Rate: 27.84% in January 2012.
• Lowest Rate: 0.10% in March 2019.

4. Future Projections:

• End of Current Quarter (2024): Expected to be 1.20%.
• Long-Term: Projected to be around 1.40% in 2025 and 1.30% in 2026, according to TICGL Economics macro models and analysts’ expectations.

Comparative Analysis with Other African Countries

Tanzania is noted as one of the ten African countries with the lowest food costs and is Third in East Africa, preceded by Rwanda and Uganda. Food inflation rates of selected African countries as of April 2024:

Observations:

1. Negative Rates: Countries like Rwanda, Somalia, Seychelles, Morocco, and Uganda have negative food inflation rates, indicating a decrease in food prices.
2. Moderate Positive Rates: Tanzania, with a rate of 1.4%, is among the countries with low positive inflation, suggesting moderate price stability.
3. Higher Positive Rates: Countries like Mauritania and Chad show higher positive inflation rates, reflecting more significant increases in food prices.

Implications for Tanzania:

• Economic Stability: The relatively low food inflation rate in Tanzania is indicative of price stability, which can contribute to overall economic stability.
• Comparative Advantage: Being among the countries with lower food inflation in Africa enhances Tanzania's economic resilience and attractiveness for investments, especially in the agriculture and food sectors.
• Policy Impact: This performance could be attributed to effective agricultural policies, food supply chain management, and possibly favorable climatic conditions.

Hence, Tanzania's food inflation trends reflect a stable and controlled rise in food prices compared to many other African countries. This stability places it favorably within the region, particularly in East Africa, and suggests positive outcomes for its economic planning and food security measures.

Tanzania’s Green Economy: Reducing Methane Emissions for a Sustainable Future

Tanzania's focus on reducing methane emissions from waste and livestock sectors involves comprehensive and collaborative strategies that not only address environmental concerns but also aim to boost economic growth and resilience, particularly for urban areas and the agricultural sector. These efforts are expected to position Tanzania as a leader in sustainable development and climate action.

Methane Emission Sources:

• Solid Waste: Nearly 60% of waste in Dar es Salaam is food waste, which significantly contributes to methane emissions when it decomposes in disposal sites.
• Livestock Sector: Tanzania's large livestock population (36.6 million cattle) is a major source of methane emissions, particularly from the digestive processes of animals.

Economic and Environmental Initiatives:

• Global Methane Initiative: Tanzania is part of a global effort spearheaded by the World Bank to reduce methane emissions as part of broader climate action strategies.
• Urban Waste Management: The Dar es Salaam Metropolitan Development Project (DMDP) aims to modernize waste management infrastructure, focusing on reduction, reuse, recycling, and treatment to mitigate methane emissions.

Sector-Specific Strategies:

• Livestock: Strategies to reduce methane emissions include optimizing feeding practices and implementing efficient manure management. The World Bank is developing a framework to monitor and improve methane emissions in livestock operations.
• Solid Waste Management: Initiatives such as food waste processing using black soldier fly larvae and composting facilities aim to reduce emissions. The scaling of these projects could significantly decrease methane emissions from food waste.

Collaborative Efforts:

• The initiative involves collaboration among the Government of Tanzania, private sector, civil society, communities, and international partners such as the British High Commission, Government of Sweden, Ministry of Foreign Affairs of the Netherlands, and the World Bank.

Economic Impact:

• Livestock Sector: Reducing methane emissions can enhance the competitiveness and resilience of the livestock sector, which is crucial for the livelihoods of smallholder farmers. Mitigation strategies could simultaneously reduce emissions by 13% and increase production by 29%.
• Urban Development: Improved waste management systems are expected to enhance urban resilience and contribute to a cleaner, more sustainable future, potentially attracting further international interest and investment.

Climate Change Mitigation:

• Addressing methane emissions is a cost-effective way to combat global warming, given methane's potency as a greenhouse gas. Tanzania's efforts in this regard align with global climate action goals and have the potential to set a benchmark for sustainable urban development and climate resilience.

Source: World Bank, 2024